The Ethanol Challenge for the United States

In 2009, a number of giant energy and chemical companies made significant investments in the development of what could be the next source of biofuels: extracting transportation fuel from algae, switchgrass, and other natural substances. Proponents of such second-generation ethanol believe that fuels derived from these substances may be cleaner and more efficient than corn-based ethanol.

But in the United States, next-generation ethanol likely won’t get from the bio-refinery to the retail service station pump in a cost-effective manner unless the biofuels industry can address distribution bottlenecks. Midstream ethanol distribution infrastructure is inadequate today, and next-generation ethanol will face these same challenges unless they are addressed. This year, of course, the industry has fallen under increased stress because of a variety of factors, including lower oil prices, the economic crisis, and delayed government regulations.